Anne’s Lemonade Stand. Anne sells lemonade for 50 cents a cup. This season she expects to sell 4,280 cups in the 12 weeks she will be open.
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Anne sells lemonade for 50 cents a cup. This season she expects to sell 4,280 cups in the 12 weeks she will be open.
Lemons cost 98 cents per pound and one pound of lemons yields 10 cups of lemonade. Sugar cost $2.20 for a 5 pound bag and each 5 pound bag yields 35 cups. She uses a 22lb bag of ice per day at a cost of $2.25 per bag. Cups cost 9 cents each.
Start up cost are $75 for pitchers, table, chairs, lemon squeezer, utensils and ice chest.
Labor cost are for her neighbor Joe who works 3 hours each day for $2 an hour except for Thursday.
How much profit will Anne make and where’s the cash? Remember profitability does not equal the cash flow.
Seems simple but where do you start and where does Anne get her start up cash? She has $25 from savings to invest where does the rest come from? Is it from Mom (investor or family member loan), or other credit sources (usually credit cards)?
What about inventory? How much should I have on hand, how long is the lead time to get the raw materials, how long does the lemonade take to make, quality control (should I start with fresh lemonade each day), etc.?